ASK TONY: I paid £6,000 into this policy, so why is it now worth nothing?

I have a with-profits insurance policy with Friends Life. I was very disappointed to receive an illustration showing that my policy has no surrender value or fund value.

I have been separated from my husband for some time and was hoping to surrender the policy and find cheaper life cover for myself.

I have always paid the premiums. Can you advise me please?L. S., Plaistow, London.

Worth nothing: I was very disappointed to receive an illustration showing that my with-profits insurance policy has no surrender value or fund value

Your problem turned out to be more complex than I expected at first sight. First, you have what is known as a whole-of-life policy. This, basically, attempts to provide life insurance throughout your life using a complex mix of life cover and investment.

When you are younger, some of your monthly premium goes towards paying the life cover and the rest goes to build an investment fund.

As you get older, and your life cover
becomes more expensive, then the insurer digs into the investment fund
to try to keep your premiums down.

Premiums
are usually reviewed periodically. In your case this should have
happened every ten years and, once you turn 70, every five years.

The
policy was sold to you in 1995, when you were 44 and your husband was
48, by London & Manchester, which has since been taken over by
Friends Life. For some reason they forgot to review your premiums and
cover.

But, more than
this, it has now become clear that when you were sold the policy you had
not understood the impact that the reviews could have on your premiums
and savings. Friends Life could not find any evidence that the salesman
had fully explained these features of the policy.

More...

So
it offered two options: you could maintain the policy, keeping the life
cover and premiums unchanged — this would give you £19,199 of life
insurance for £35 a month; or you could receive compensation made up of
the surrender value of the policy at the time the first ten-year review
should have taken place and have a refund of all premiums you have paid
since then plus interest.

The
surrender value was £1,192. The return of premiums plus interest would
give you just over £4,280, making £5,472 in total. This is a very
useful windfall which you have chosen to take.

Incidentally,
your policy small print has some interesting information for anyone who
believes financial advice with commission costs them nothing. More than
£6,000 in charges were expected to be taken from your simple
£35-a-month policy in the first 14 years. These were expected to wipe
£9,500 off your investment growth.

After
paying in £5,880, this meant you would get back just £693 even with
investment growth of 7.5 per cent a year. The salesman received £597
initially and then £7.63 a year. So far he has pocketed £726.

Npower sent me a bill for £11,000 when I was £1,800 in credit

I
pay npower £177 a month for energy. At the beginning of August I
appeared to be £1,800 in credit, so altered my monthly payments to £100.

A
couple of days later I received a letter by post that did not make
happy reading. This said the latest readings might not be correct.
According to these, I could soon be receiving a bill for around £935 for
gas and £10,000-plus for electricity.

I am on medication for high-blood pressure, so you can imagine the effect the letter had on me.

It would appear that an incorrect reading taken by one of their meter readers was the cause of the problem.J. M., Ashford, Middlesex.

Although
you sorted out this problem yourself I felt your letter deserved a
place on this page. After you had taken meter readings, it emerged that
you a were actually £168 in credit.

However,
no credit at all can go to either npower or its meter readers. To send
out a letter quoting a potential bill of almost £11,000 is simply
unacceptable. If my 90-year-old mum received a letter like this, she
would be terrified.

Npower
says this was only sent as a prompt for you to contact them and to make
you aware that it needed further readings to ensure your account was
billed correctly.

That’s as may be. But there was no need to scare you like this at all.

I want to a refund on my husband's car cover, but the Post Office lost his insurance certificate

My
husband, who will be 89 in November, decided to give up driving earlier
this year. I called Post Office Insurance on July 12 to get a refund on
his car cover.

I
posted his insurance certificate the following day. But when I phoned,
the Post Office said it had not received the form and it could be lost
or in another department. I filled in another form stating the original
was now lost, stolen, or mislaid. I put it in the prepaid envelope
thinking nothing could go wrong.

A
week later an identical form arrived, which we again filled in. Then
yet another one arrived. I phoned to be told that if I did not fill in
this form we would not get a refund. The car insurance was £629.99. Can
you help? M. E., Bristol.

You
would think that the Post Office would know how to handle mail, but it
seems to have had rather a lot of problems in your case.

Once
I made contact they got to work on your problem and came up with a
solution very quickly; although they still don’t have much clue as to
what went wrong.

A
spokesman tells me each item of post received is scanned into their
systems and linked to the customer’s account. They have done a thorough
search, but can’t locate any of the items you sent.

In light of the time that has elapsed, as a gesture of goodwill, the Post Office is sending you £388.50.

This
is made up of the original refund of £154.56 you were promised, plus
the £35 cancellation fee and an extra £198.94 for the unused months on
his insurance. Let’s hope this doesn’t get lost in the post.

My buildings insurer won't let me renew as it thinks I've claimed twice for the same work

Sheilas'
Wheels says it will not provide me with a renewal quotation for my
buildings insurance and that I must make alternative arrangements.

I
have made a claim for subsidence on my conservatory. But it says I had
already claimed for this with Prudential, with whom I was insured from
2005 to 2008.

I’ve
phoned Prudential, which says that Sheilas' Wheels is passing the buck.
I want Sheilas' Wheels to renew my policy and put right the work on the
conservatory.K. T., Liverpool.

I’ve
got good news and bad news. The good news is that Sheilas' Wheels is
willing to keep insuring you. It seems there was a mistake in how your
previous claim with Prudential was registered with the Claims and
Underwriting Exchange.

This
is a database where all claims are registered so companies can check
whether their customers are claiming twice for the same thing or
engaging in fraud.

Sheila’s Wheels is now speaking to Prudential to get the claim correctly registered.

The
bad news is it is not willing to pay out on your claim for your
conservatory because it says the damage is down to natural wear and tear
and maintenance — or lack of it.

If you wish to dispute this further, you can go to the free Financial Ombudsman Service. Call 0300 1239 123.

STRAIGHT TO THE POINT

Can you provide the details of companies that will help me get the best annuity income from my pension? J. T., by email.

I
bought a £300 cooker from Curry’s on an interest-free payment plan but
was later hit with a £25 admin fee. Isn’t this misleading? L. W., Swansea.

A
spokesperson for Curry’s claims the admin fee would have been
highlighted clearly in the terms and conditions. But as a gesture of
goodwill it has agreed to refund the fee and send you a cheque for £25.

What
happens on the compensation front for a joint savings account when one
account holder dies and there is more than £85,000 in the account? K. T., Warrington.

If
the estate has not been wound up, both the beneficiary and the estate
can claim up to £85,000 each in compensation. Once the estate has been
wound up, the usual compensation rules apply.

If,
as the surviving joint account holder, you are the main beneficiary,
move your money as soon as possible. At this point the limit drops to
£85,000.

TalkTalk won’t let me take the phone number BT gave me 30 years ago with me to a new provider. Isn’t this illegal? T. T., Surrey.

If
a customer remains at the same address and their number is ‘active’,
their provider must allow it to be transferred to a new company, says
communications watchdog Ofcom.

However, if your line has been disconnected, your number will be deemed inactive and can’t be transferred.

We
referred our daughter to British Gas for free loft and cavity wall
insulation. Are we both entitled to the £50 referral fee advertised? D. F., East Sussex.

British
Gas is offering £50 for referring someone for free insulation, but only
when the customer you refer is on a qualifying benefit — for example,
pension credit. If this is the case, then you will both be paid £50 once
the installation is completed.

Do
we still get £85,000 of cover with banks and building societies under
the Financial Services Compensation Scheme now that the value of the
euro has fallen against sterling? S. B., by email.

Yes.
The exchange rate used to convert the European Commission’s €100,000
to our equivalent £85,000 from December 31, 2010, is fixed for five
years.

- Write to Tony
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